Under the Crowne Plaza Guaranty, what specific obligation of IHG is each Guarantor waiving?
Crowne_Plaza Franchise · 2025 FDDAnswer from 2025 FDD Document
The Guaranty constitutes a guaranty of payment and performance and not of collection, and each Guarantor specifically waives any obligation of IHG to proceed against Licensee or any money or property held by Licensee or by any other person or entity as collateral security, by way of set off or otherwise.
Source: Item 23 — Receipts (FDD pages 100–424)
What This Means (2025 FDD)
According to the 2025 Crowne Plaza FDD, the Guarantor is waiving IHG's obligation to take action against the licensee before pursuing the guarantor. Specifically, the Guarantor waives any requirement for IHG to first proceed against the licensee, or any assets held by the licensee or others as collateral, before seeking recourse from the Guarantor.
This means that IHG has the right to seek payment or performance directly from the Guarantor if the licensee defaults on their obligations under the license agreement. The Guarantor cannot demand that IHG first exhaust all other possible remedies against the licensee before pursuing the Guarantor's assets. This clause is designed to protect IHG by ensuring they have a direct and immediate avenue for recourse in case of default.
For a prospective Crowne Plaza franchisee, this highlights the significant responsibility placed on the Guarantor. The Guarantor's assets are at risk from the moment the license agreement is signed, and IHG is not obligated to pursue the franchisee first. This is a standard practice in franchising, as it provides the franchisor with added financial security and reduces the risk associated with granting a license to a new franchisee. Therefore, anyone considering acting as a Guarantor should fully understand the financial and legal implications before signing the Guaranty.